The Coase Theorem Implies That Victims of Pollution Should Be

Multiple Choice

The Coase Theorem implies that victims of pollution should be able to pay polluters not to pollute if the victims value a reduction in pollution more than the polluters value the production of the pollution. Which of the following does not explain why this type of payment does not work in "real life"?

A) If there are many victims, the costs to them of organizing may be quite high.
B) If there are many firms in the industry, it may be difficult for the victims to negotiate with all of the firms.
C) The victims may have trouble quantifying the value to them of reducing the pollution.
D) Bargaining costs are likely to be small in this case, so the theorem does not apply.